Keeping It Done When It’s Over: New Rules for Submitting Generic/Biosimilar Settlements to DOJ and FTC

August 12, 2019

Melanie R. Rupert & Alexander Plushanski

Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”),[1] innovators and generics must file settlement agreements with the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”). This is a serious requirement that could result in civil penalties for non-compliance. Recently, the FTC issued a press release that, as of June 17, 2019, settlement agreements must be electronically filed, and paper copies are no longer accepted.[2] In the past, settlements were mailed to the DOJ and FTC as a matter of course after a settlement. This change to the filing requirements for settlement agreements continues the modernization of the MMA, which was also recently amended to require that agreements covering biologics and biosimilars be filed.[3] An additional amendment further requires that parties filing an agreement under the MMA must file any other agreement “between the parties” “within 30 days” of the settlement agreement – seemingly regardless of whether the agreement is related to the drug or biologic which is the subject of the settlement.[4]

Understanding the recent changes to the MMA is critical to complying with its provisions and avoiding a risk of civil penalties. In this article, we outline the relevant provisions of the MMA, highlight the recent changes to the MMA, and offer insight on their practical impact.

Required Filings

Since its passage in 2003, the MMA has required that brand name drug manufacturers and generic drug applicants who have submitted an Abbreviated New Drug Application (“ANDA”) containing a certification under section 505(j)(2)(A)(vii)(IV) of the Federal Food, Drug, and Cosmetic Act (“Paragraph IV Certification”) file settlement agreements with the FTC and DOJ.[5] Recent amendments to the MMA extended this filing requirement to include settlement agreements between a “biosimilar biological product applicant who has submitted a biosimilar biological application and a brand name drug company."[6]

As amended (with the amendments shown in bold below), section 1112(a) of the MMA now requires filing of settlement agreements that are directed to the following subject matter:

“The manufacture, marketing, or sale of the brand name drug that is the listed drug in the ANDA or the reference product in the biosimilar biological product application involved;”
“The manufacture, marketing, or sale of the generic drug for which the ANDA was submitted or of the biosimilar biological product for which the biosimilar biological product application was submitted; or”
“The 180-day period referred to in section 505(j)(5)(B)(iv) of the Federal Food, Drug, and Cosmetic Act [21 U.S.C. 355(j)(5)(B)(iv)] as it applies to such ANDA or to any other ANDA based on the same listed drug; or”
“Any of the time periods referred to in section 351(k)(6) of the Public Health Service Act [42 U.S.C. 262(k)(6)] as such period applies to such biosimilar biological product application or to any other biosimilar biological product application based on the same reference product.” [7]

Section 1112(c)(2) also now mandates that parties required to file an agreement under the act must also file any agreements that are not described in the filed agreement and are “contingent upon, provide a contingent condition for, were entered into within 30 days of, or are otherwise related to an agreement that is required” by another section of the MMA.[8] The scope of this amended provision is potentially quite broad – and could encompass agreements directed to entirely different drugs or biologics, as long as those agreements were entered into 30 days before or after the settlement agreement that is being submitted (“primary agreement”).

Section 1112(c)(1) does, however, provide clear exemptions from the MMA filing requirements for certain agreements. The agreements falling within this exemption must solely concern the following subject matter: (1) purchase orders for raw material supplies; (2) equipment and facility contracts; (3) employment or consulting contracts; or (4) packaging and labeling contracts.[9]

Filing Procedure

Effective June 17, 2019 parties must now file electronic copies of all agreements by email to the FTC (mma@ftc.gov) and the DOJ (mma@usdoj.gov).[10] Prior to this date, agreements were submitted via “by hand” delivery to these agencies, but the FTC is now expressly “requiring electronic filing instead of hard-copy submission.”[11]

Electronic filings also must include a cover sheet, which is available on the FTC’s website, and separate cover sheets are available for agreements related to ANDAs or biosimilars. In the ANDA coversheet, filers must include the identities of (1) the parties; (2) any related inter partes review proceedings (“IPR”) or judicial actions; (3) the drug products; (4) relevant NDAs and ANDAs; (5) the subsection of the MMA that requires filing; and (6) any related agreements that were previously filed.[12] The parties must also identify whether “any party of the agreement has been granted first filer status by the FDA . . . for an ANDA covered by the agreement.”[13] The biosimilars coversheet generally requires the same information, with the identities of the biologics applications necessarily replacing the NDA and ANDA, and omits requirement to identify a first filer.[14]

Filing Deadlines

Section 1113 of the MMA provides that any filing required under section 1112 shall be filed with the FTC and DOJ not later than 10 business days after the date the agreements are executed.[15] Concurrently, section 1112(a) requires filing agreements prior to the date of the first commercial marketing of the generic drug or biosimilar product. [16] The recent amendments ensure that the same filing deadlines apply to both generics and biosimilars.

Enforcement and Penalties

Parties that fail to comply with the MMA’s filing requirements are liable for a civil penalty for each day during which the party is in violation.[17] The maximum amount of civil penalty is periodically adjusted for inflation and is currently $15,036. [18] If a party fails to comply with the MMA, a United States district court may order compliance and may grant other equitable relief in its discretion.[19]

Key Takeaways and Practical Considerations

Companies must be cognizant of the recent changes to the MMA and ensure that they remain in compliance with its terms by filing all required agreements, including agreements covering biosimilars and biologics. Additionally, companies must be sure to file agreements between the same or related entities entered into within 30 days before or after the primary agreement is executed. The requirement to submit “agreements entered into within 30 days of” the primary agreement is quite broad.[20] Accordingly, when submitting a settlement agreement to the DOJ and FTC, companies should be sure to discern whether there are any other agreements to submit concurrently. These other agreements should also be evaluated for the exemptions provided in section 1112(c)(1). When uncertainties arise, the FTC has stated that “you may submit anything you believe will assist the agencies in evaluating the agreement” and that “FTC staff is willing to discuss issues with parties in advance of their filing an agreement,” which could provide further clarity to filers regarding whether a particular agreement or category of agreement falls within the requirements of the MMA for submission.[21]

In evaluating whether a settlement agreement needs to be submitted under the MMA as a result of the settlement of an IPR proceeding, the nature of the parties to the agreement are an important consideration. For example, the petitioner may not necessarily be a generic drug company and may not have filed an ANDA at all. In this situation, the petitioner may not meet the requirement of seeking to manufacture, market, or sell a generic drug.

The provisions of the settlement agreement itself should also be considered in determining when a settlement agreement must be submitted. While the standard filing deadline is “not later than 10 business days after the date the agreement” is executed, the agreement must also be filed prior to the first commercial marketing of the generic or biosimilar product.[22] Accordingly, the parties may need to file earlier than 10 days after execution if the agreement provides for an imminent commercial launch of the generic or biosimilar.

Companies should not be concerned, however, that settlement agreements could become public solely due to their submission to the DOJ and FTC under the MMA. Section 1114 expressly provides that “no such information or documentary material may be made public, except as may be relevant to any administrative or judicial action or proceeding.”[23] Accordingly, the act of filing an agreement itself does not cause the agreement to become publically available. The subject matter of agreements between pharmaceutical companies will continue to evolve as drug development changes. The recent amendments and the shift to electronic filing demonstrate a commitment to modernizing the MMA to keep up with advances in the life sciences space.

[1] Pub. L. No. 108-173, §§ 1111-1118 (codified at 21 U.S.C. § 355 note).

[2] Pharmaceutical Agreement Filing Procedures Updated, FEDERAL TRADE COMMISSION (Jun. 6, 2019), https://www.ftc.gov/news-events/press-releases/2019/06/pharmaceutical-agreement-filing-procedures-updated.

[3] Pub. L. No. 115–263, § 3, 132 Stat. 3673, 3673.

[4] Pub. L. No.115–271,title IV, § 4004, 132 Stat. 3960, 3961.

[5] 21 U.S.C. § 355 note at § 1112(a).

[6] Id.

[7] Id. at § 112(a)(2) (emphasis added to show recent amendment). These time periods provide exclusivity for the first interchangeable biological product for a period of: (1) “1 year after the first commercial marketing of the first interchangeable biosimilar biological product;” (2) 18 months after either a final court decision or dismissal of an action “against the applicant . . . for the first approved interchangeable biosimilar biological product;” or (3) “42 months after approval of the first interchangeable biosimilar biological product if the applicant . . . has been sued . . . and such litigation is still ongoing within such 42-month period” (18 months if the applicant has not been sued). 42 U.S.C. § 262(k)(6).

[8] 21 U.S.C. § 355 note at § 1112(c)(2) (emphasis added to show recent amendment).

[9] Id. at § 1112(c)(1).

[10] Pharmaceutical Agreement Filing Procedures Updated, FEDERAL TRADE COMMISSION (Jun. 6, 2019), https://www.ftc.gov/news-events/press-releases/2019/06/pharmaceutical-agreement-filing-procedures-updated.

[11] Id.

[12] MMA Pharmaceutical Agreement Filing Cover Sheet (NDAs and ANDAs), FEDERAL TRADE COMMISSION (Aug. 7, 2019, 1:40 PM), https://www.ftc.gov/system/files/attachments/pharmaceutical-agreement-filings/mma_pharmaceutical_agreement_filing_cover_sheet_ndas_andas.pdf.

[13] Id.

[14] MMA Pharmaceutical Agreement Filing Cover Sheet (BLAs), FEDERAL TRADE COMMISSION (Aug. 7, 2019, 1:40 PM), https://www.ftc.gov/system/files/attachments/pharmaceutical-agreement-filings/mma_pharmaceutical_agreement_filing_cover_sheet_blas.pdf.

[15] 21 U.S.C. § 355 note at § 1113.

[16] Id. at § 1112(a)(1).

[17] Id. at § 1115(a).

[18] 16 CFR § 1.98(n).

[19] 21 U.S.C. § 355 note at § 1115(b).

[20] Id. at § 1112(c)(1)-1112(c)(2). However, this requirement remains subject to the four narrow exceptions for submissions of agreements identified in section 1112(c)(1).

[21] Frequently Asked Questions About Filing Agreements with the FTC Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, FEDERAL TRADE COMMISSION (Jun. 6, 2019), https://www.ftc.gov/system/files/attachments/competition-policy-guidance/mma_pharmaceutical_agreement_filing_faq_6-6-19.pdf.

[22] 21 U.S.C. § 355 note at § 1112(a)(1)-1113.

[23] Id. at § 1114.

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